Personal Loan Balance Transfer

The Working Mechanism of a Personal Loan Balance Transfer

The unsecured nature of personal loans makes it a viable option for an applicant who is unable to provide collateral. The demand for personal loans has grown significantly over the past few years. Many new lending institutions have entered this space to offer customized loan products to a diverse range of customers. All loans have an underlying repayment obligation. However, many a time, it can be challenging for people to make their repayments. During this situation, they often default on their EMIs, which is detrimental to their credit score. A personal loan balance transfer can help manage these situations.

What Is A Personal Loan Balance Transfer? 

A personal loan balance transfer is a process of transferring the outstanding balance from an existing loan account to a new one. It is very similar to home loan refinancing. However, here there’s no house involved. People opt for a personal loan transfer when they get favourable terms from the new lender— for example, a lower interest rate on personal loans. During a personal loan balance transfer, the outstanding loan amount is repaid by the lender in full, and a new loan account is opened for the borrower.

The borrower has to meet the new terms and conditions associated with the loan. A personal loan balance transfer has several benefits, for example, a lower interest rate, extended loan tenure, and a top-up loan facility. These benefits can help borrowers reduce their EMI obligations and total outstanding balance. It’s a great way to reduce borrowing costs. Finding the lowest personal loan interest rate in India is highly recommended for a balance transfer.  
Additional Read: 6 Life Situations Where Instant Personal Loan is Necessary

What You Need To Know About Your Personal Loan Balance Transfer

Personal loans can be quite expensive, especially over the long-term, if interest rates are high. At some point, it might become difficult for you to repay your loan. However, nowadays, borrowers can get respite from high installment costs through a balance transfer loan.

Understanding A Personal Loan Balance Transfer

A personal loan balance transfer is when you move your outstanding balance from one lender to another with better rates, transparency, and services.

Borrowers decide on balance transfer loans due to the following reasons:

  • One of the many advantages of transferring your personal loan is that it reduces current personal loan interest rates. If the new lender charges lower interest rates, the borrower can lower its monthly costs, thus helping with its budget. With Fullerton India, a borrower can get a personal loan at an attractive interest rate, starting from 11.99% p.a. 
  • Another reason for switching the current lender may be that you are not satisfied with the current lender and its services, and the new lender is providing you with better services.
  • Some lenders also allow you to extend your repayment tenure, which your old lender may not provide. Extending the tenure will allow you to make smaller installments and manage your finances properly. With Fullerton India, you can select a tenure of up to 5 years. 
  • One great perk of transferring the personal loan balance is that it helps improve your credit score by making payments more quickly.

When you are thinking of a personal loan balance transfer, make sure to compare different lenders and services provided by them to get the best current personal loan interest rates suited to your needs and preferences.

With Fullerton India, getting a personal loan is quick and hassle-free as the process is done digitally, with minimal documentation and attractive interest rates. 

To know more about personal loans, visit our website.

Must Read: Here’s how to Save Money through an Instant Personal Loan

How Does A Personal Loan Balance Transfer Work?

A personal loan balance transfer is a scheme where customers can transfer their outstanding personal loan to another lender who offers a better deal. While opting for a personal loan balance transfer looks lucrative, it is necessary to carefully evaluate if it is beneficial to you. Personal loan balance transfer comes with a penalty from your existing lender and attracts processing fees from the new lender. 

How does a personal loan balance transfer work?

When you transfer your outstanding personal loan to a new lender, they will pay off your existing loan with the current lender. However, you will be liable to pay the prepayment charges if your existing loan terms have a prepayment clause in it. Calculating all costs can help determine your savings from the loan transfer, and this calculation can be quickly done using a personal loan prepayment calculator available online.

Is personal loan balance transfer a good idea?

It depends on your current financial institution’s fees while transferring the loan. However, there are several benefits of a personal loan balance transfer. 

Let’s understand:

  • Lower Rate of Interest,

The most significant advantage of a loan balance transfer is that the borrower is offered lower interest rates.

  • Extended Repayment Period

On transferring the loan to the new lender, one can negotiate to extend the loan repayment tenure, decreasing the monthly EMI commitment.

  • Loan Top-up Facility

You can also meet your additional fund requirement at the lowest interest rates with top-up facilities offered by the new lender.

  • Improved CIBIL Score

Since the loan transfer makes EMI affordable, you can repay the loan sooner and within the due date. This will drastically improve the CIBIL score.

If you plan to go ahead with the balance transfer, it is important to evaluate all the pros and cons to make an informed decision. You should also choose the lender who offers utmost transparency while providing lower interest rates.

Must Read: 5 Typical Personal Loan Requirements to Know Before Applying

Things To Keep in Mind – Personal Loan Balance Transfer

balance transfer loan

A balance transfer loan is a solution to ease your burden of high-interest EMI’s. If your loan EMI’s are causing trouble and managing finances is not easy, a balance transfer loan is a good option.

A personal loan balance transfer offers a chance to switch the loan amount to a lower interest rate for your existing personal loan.

Personal Loan Balance Transfer

A balance transfer loan works like a credit card balance transfer. This can be availed on a low-interest rate, and based on the credit history, a higher loan amount can be transferred to another lender. A easy personal loan balance transfer gives ease to transfer the credit card balance or existing personal loan. 

You can transfer the previous loan on new low-interest rates, or you can switch the lender as well. The balance transfer depends on the bank policies and the borrower’s credit profile.

Time To Opt for A Balance Transfer

Here are some reasons you should opt for a balance transfer loan amount.

  • Rate of interest 

The best reason to select the balance transfer is to get a reasonable interest rate. At the time of borrowing, the interest rate might have been high, but right now, some other lender is offering a low-interest rate. In such a situation, take a balance transfer of the loan. 

  • Increase the loan amount

It may be possible that while selecting the personal loan balance transfer, you need to increase the loan amount. It is essential to note the terms and conditions of the new lender.

Additional Read: Know how employment status affect your personal loan eligibility?

Important Factors to Know Before Taking a Personal Loan Balance Transfer

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What Is a Personal Loan Balance Transfer?

A personal loan balance transfer is the option to transfer their existing personal loan balance from one lender to another. It happens when a different lender offers lower interest rates, better service, top-up loans etc. Though the offer will look lucrative, you must evaluate the offer before taking personal loan balance transfer. So, here are few factors that you need to consider:

Important Factors to Know Before Taking a Personal Loan Balance Transfer

  • Consider The Processing Fees and Surcharges

While transferring from one lender to another, you may be charged a certain processing charge by the old lender to close the previous loan account. You should calculate these additional charges to determine if the transfer is still worth it.

  • Check Terms and Conditions

Read the terms and conditions that the new lender offers you before signing the deal. Ensure that there are no hidden clauses before taking the decision.

  • Evaluate The Revised EMI And Tenure

The people transfer their loan from one lender to another due to lower instalments offered. However, one must learn the tenure they offer as extended tenure will lead to an overall higher payment.

  • Additional Offers

Some lenders offer pre-approved personal loans and additional discounts on financial products when you opt for a balance transfer. Sometimes you end up availing of services that are not required to avail the offer. So, think twice if you require those additional policies even though the offer is attractive. 

While personal loan balance transfer is undoubtedly excellent for reducing your financial burden, it is imperative to think twice and judge if the lucrative offer is beneficial. 

Additional Read: Avail Personal Loan of up to Rs 10 lakh with Easy Tenure with Fullerton India

How Does A Personal Loan Balance Transfer Work?

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A personal loan balance transfer is best if you want to save money on interest. If you have a good credit history and can find a lender offering you a lower personal loan interest rate, a balance transfer can greatly benefit you.

It can be done online or in-person and is easy to do either way.

The first thing you’ll need to do is find a personal loan provider with the best interest rate that fits your needs. Ensure that this lender accepts personal loan balance transfers. You will require to put in a fresh personal loan application with residence, income and identity documents to apply for a personal loan balance transfer. Once the application process has been completed and approved, it will then be time for you to transfer your balance from one lender to another. 

You will then be required to get a NOC and foreclosure from your existing lender. 

Once you get a loan sanction letter and the amount from the new lender, you can pay off your existing lender and close your loan. Ensure that the lender gives you a No Dues Certificate.

Things to keep in mind when opting for a personal loan balance transfer:

  • Calculate and ensure that the overall cost of the transfer isn’t amounting to a big loss.
  • Make sure you know what all the fees of a balance transfer are. 
  • Know exactly when the new lender’s payments will begin and how they will affect your existing loans.

Additional Read: Is using personal loan Balance Transfer a good idea or not?

What Are The Factors To Consider When Opting For Personal Loan Balance Transfer?

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At times, taking a personal loan leads to heavy burden and stressful life. To overcome this stress, borrowers take certain steps such as choosing the personal-loan balance transfer scheme. The (personal-loan) balance transfer scheme enables you to carry forward your outstanding loan balance at a new low rate of interest along with better features from another lender. 

Usually, the main reason to have a personal loan balance transfer is to get a lower rate than the existing one, offered by any other financial institution.

But what are things that you must keep in mind when opting for personal-loan-balance-transfer? 

  1. Rate of Interest: The personal loan interest rate should obviously be lower than what is offered by the existing lender.

  2. Processing charges and penalties: Check the processing charges of the new lender and the prepayment penalty charges of the old lender to ensure that the loss isn’t larger than the gain. This is applicable for the prepayment penalty charges as well.

  3. The minimum amount of Loan: Check whether your account fulfils the minimum loan amount required to avail a personal loan balance transfer from any other lender.

  4. Actual benefit on operation costs: Calculate what will be actual benefit after deducting all the processing and penalty charges that you’ll have to pay. A considerable gain here indicates that it’s actually worth going for such a big hassle!

Ensure that you read the documentation, terms and conditions of both lenders carefully before signing off on a personal loan balance transfer to avoid any unwelcome surprises in the future.

Must Read: what is the Pros and Cons of Loan Balance Transfers?

Reduce your Monthly EMIs Using Personal Loan Balance Transfer

As easy it is to get a personal loan, managing and repaying it can be difficult due to the high-interest rate. Which leads to applicants looking for alternate ways to reducing their outstanding debt. While there can be many ways, one of the most common is to use the personal loan balance transfer.

What is a Balance Transfer?

A personal loan balance transfer is transferring the current personal loan to a comparatively lower interstate. This leads to a reduction in your monthly EMIs. As simple and beneficial as it may sound, it also leads to a change in the terms and conditions of the loan.

Benefits of Balance Transfer

You can easily get a personal loan from various lenders; the balance transfer option helps you get a fresh chance to ease your EMI burden. Some of the benefits of Balance Transfer are:

1.      Reduced Tenure:

Each lender can have different balance transfer terms, based on the terms of your lender you can expect a marginally reduced loan tenure with Balance Transfer. While this may be good news as you will be debt-free sooner, it can also be stressful for many. However, if you have opted for a long-term repayment period then the balance transfer can really be in your favor.

2.      Lower Interest rate

If you are feeling bogged down by your high monthly EMIs then, the balance transfer can be of great help in transferring your existing loan to a different financial institution at a lower rate. However, make sure that you are using the personal loan EMI calculator to get a holistic idea of the new loan terms before you opt for a balance transfer. Certain additional factors like processing fees, loan tenure, or other charges must also be taken care of before you take the step.

3.      Increase in Your Credit Score

Dragging the personal loan for long can somewhat negatively affect your credit score and hamper future loan chances. However, transferring to a different institution will increase your credit score, leading to more credit options in the future.

Most of the financial experts believe that balance transfer of personal loan can be a good move in the long term and make your finances better. Make sure you go through the pros and cons of the deal before you make the final decision.

Must Read: 9 Surprising benefits or advantages of taking a Personal Loan